Anomalies in sets of health care transactions are good indicators of clinical and financial errors, as well as outright waste, abuse and fraud. The FBI and other government agencies have increased efforts since the 1990's to address the issues of waste, fraud, and abuse. Due to the increasing prevalence of fraud in healthcare, numerous offerings have been introduced into the market to address the problem. The offerings focus on disease management or data mining software programs to look for “red flags.” Typical red flags that are looked at by payers include a medical provider charging far more than peers for particular services; a medical provider providing more tests or procedures per patient than peers; medically “unlikely” procedures such as one patient having dozens of the same tests; given the choice of similar treatments, billing for the more expensive one more often than peers; a high percentage of patients traveling long distances for routine services or tests; and high prices for medical equipment or supplies that can be purchased for far less.
Statistics show that $108 billion (16%) of total healthcare costs in the United States is paid improperly due to billing errors (see www.cms.gov); $33 billion Medicare dollars (7%) are based on fraudulent claims billed to the government (see www.ncpa.org); $100 billion private payer dollars (20%) are estimated to be paid improperly (MBA audit statistics); $50 billion or 10% of private payer claims are attributed to health care fraud (Source: Blue Cross Blue Shield); each year there are some $37.6 billion in medical errors (see www.ahcpr.gov); 10% of drugs sold worldwide are counterfeit (up to 50% in some countries) (see www.fda.gov); the prescription drug market is $121.8 billion (see www.cms.gov); and the counterfeit price tag is $12.8 billion.
In calendar year 2003, health care expenditures amounted to $1.7 trillion (Source: the Office of the Actuary, Centers for Medicare & Medicaid Services). In that same year, it is estimated that losses due to fraud were 3-10% of the total amount of health care expenditures, or $51-170 billion. The health care industry is in a strikingly similar position to that of the financial services industry fifteen years ago. Technology can play a critical role in detecting fraud and abuse and it can help to pave the way toward prevention. Technology can play a critical role in understanding market dynamics by looking at data in its individual and aggregate form. Therefore, there is a need for a software tool that provides micro and macro analysis of healthcare continuum data.
Currently, only limited data is captured on economic structural fraud. This type of fraud may include fee splitting, falsifying performance guarantees, kickbacks, payments to undisclosed parties, and other financial contractual misrepresentations.
Healthcare fraud is growing at an accelerated rate in the United States. Traditional schemes include false claim submissions, care that lacks medical necessity, controlled substance abuse, upcoding (billing for more expensive procedures), employee-plan fraud, staged accident rings, waiver of co-payments and deductibles, billing experimental treatments as nonexperimental ones, agent-broker fraud relationships, premium fraud, bad-faith claim payment activities, quackery, over utilization (rendering more services than are necessary), and kickbacks. Evolved schemes include complex rent-a-patient activities, 340 B program abuse activities (setting aside discounted drugs, making them unavailable to those in need), pill mill schemes (schemes to falsely bill prescriptions), counterfeit drug activities, and organized criminal schemes.
These statistics highlight the problems that arise from numerous types of healthcare transactions. Unfortunately, current market offerings fall short of addressing all of the issues. The current market offerings tend to focus at some level of audit but not comprehensive work; and specifically on provider fraud. The market does not offer a contemporaneous software program that addresses prevention, detection, investigation, and mitigation. The market tool offerings are weak on organized crime, employer, payer, and vendor healthcare fraud tools.
It is generally known that initiatives for fraud prevention and detection are expected within the government programs. It is generally known that initiatives for fraud prevention and detection are in the privately managed programs. It is not generally known how to prevent, detect, and prosecute contemporaneous routes of fraud from multiple financial, operational functions, and entities. Waste and abuse both incorporate operational inefficiencies through the health care continuum.
There is a need for an anomaly tracking system which targets all in which clinical or financial transactions occur within a patient, provider, payer, plan sponsor (employer plan), or vendor categories.